Earlier this year hotel booking provider HRS unveiled a new business tariff which offers exclusively negotiated fixed prices for its customers.
HRS managing director Jon West spoke to BBT to give us the lowdown on how it all works and how it could affect buyers:
Explain this new ‘Business Tariff’ and how buyers can get discounted hotel rates?
When companies negotiate corporate rates, they usually need to offer a high number of room nights and invest a lot of time into it, and comparing offers and negotiating prices with hotels can be tedious and time-consuming.
So to spare smaller and bigger companies from costly price negotiations, companies without a framework agreement with the hotel industry can benefit from discounts averaging 30 per cent on the daily room rates available online.
The negotiated rates are exclusively offered via HRS, and are bookable as a special Business Tariff in the 100 most important international business travel hubs.
Is it just the major hotel chains involved in the tariff?
No not at all, we look at the hotels and see how compatible they are to the traveller, and we have a ‘bookability scale’ which looks at 22 different features of the hotel such as: customer review rating, star rating, benchmark price in the city, cancellation policies etc. And if that hotel is compatible then we invited them to participate.
We made no differentiation between chain or independent hotels it all came down to bookability. An example being all bookings with hotels with a fixed rate can be cancelled until 6pm local time on the day of arrival, so costs for rebooking and cancelling can be avoided.
Also one important thing to add is if a corporate has negotiated a rate in a hotel where we are going to negotiate a rate, then we don’t touch that rate and we don’t use their volume to negotiate our rate.
We only negotiate our volume from people who haven’t got a negotiated rate in that hotel or area so it’s the long tail we are trying to consolidate together as one buyer. This is important as we respect the relationship between the corporate and hotel.
Are buyers then finding it hard to negotiate rates?
Buyers are very capable of negotiating good rates, but I think sometimes they are mistaken with the volume they are putting into the hotel and if that’s worth the negotiated rate. I think the bar rate that’s available is still a very competitive rate, mainly because it’s a buyers market, and therefore if you’ve negotiated a rate that’s too high you may not benefit from the bar rate. So people are capable of getting a good rate but perhaps this is done on too lower volume.
How will you keep hitting the volumes you set out to achieve?
I think all the hotels that have agreed to participate have got their eyes wide open they will be watching carefully but at the start we’ve only focused on a small number of hotels in each city. And I think it’s just the same way if a buyer is negotiating on behalf of one company and they’re under pressure to ensure their traveller’s book that hotel.
How did you decide which hotels to include?
We approached double the number of hotels that we wanted to include estimating that half wouldn’t sign up. However, if a hotel wanted to be part of it but didn’t come up with a good rate we wouldn’t include them. So again it’s down to bookability of the hotel.
How do you measure the success of this initiative?
We should be able to see the results very quickly as we track the performance of every one of the 250,000 hotels in our portfolio. We’d expect the bookability percentage to increase and expect these hotels to get more bookings.